On 20 May 2002, UN Secretary-General Kofi Annan, joined East Timorese President Xanana Gusmão and the heads of state from over a dozen countries to lower the United Nations (UN) flag and raise the Timorese one. Four months later, Timor-Leste became the 191st member state of the UN.

East Timor presents two contradictory stories in the history of UN peace operations. On the one hand, it is an outstanding success. In two and a half years, a territory that had been reduced to ashes after the 1999 referendum on independence held peaceful elections and celebrated independence. On the other hand, however, East Timor can be seen as a series of missed opportunities and wastage. Of the UN Transitional Administration's annual budget of over $500 million, only around one-tenth actually reached the East Timorese. At one point, $27 million was spent annually on bottled water for the international staff – approximately half the budget of the embryonic Timorese government, and money that might have paid for water purification plants to serve both international staff and locals well beyond the life of the mission. More could have been done, or done earlier to reconstruct public facilities. This did not happen in part because of budgetary restrictions on UN peacekeeping operations that, to the Timorese, were not simply absurd but insulting. Such problems were compounded by coordination failures, the displacement of local initiatives by bilateral donor activities and the lack of any significant private sector investment.